Risk Management Activities

6 Months Ended

Jun. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Commodity Price Risk. As more fully discussed in Note 12 to the Consolidated Financial Statements included in EOG's 2020 Annual Report, EOG engages in price risk management activities from time to time. These activities are intended to manage EOG's exposure to fluctuations in commodity prices for crude oil, NGLs and natural gas. EOG utilizes financial commodity derivative instruments, primarily price swap, option, swaption, collar and basis swap contracts, as a means to manage this price risk. EOG has not designated any of its financial commodity derivative contracts as accounting hedges and, accordingly, accounts for financial commodity derivative contracts using the mark-to-market accounting method.

Commodity Derivative Contracts. Presented below is a comprehensive summary of EOG's financial commodity derivative contracts as of June 30, 2021. Crude oil and NGL volumes are presented in thousand barrels per day (MBbld) and prices are presented in dollars per barrel ($/Bbl). Natural gas volumes are presented in million British Thermal Units per day (MMBtud) and prices are presented in dollars per million British Thermal Units ($/MMBtu).


Crude Oil Financial Price Swap Contracts
		Contracts Sold
Period	Settlement Index	Volume (MBbld)	Weighted Average Price ($/Bbl)

January 2021 (closed)	New York Mercantile Exchange (NYMEX) West Texas Intermediate (WTI)	151	$	50.06
February - March 2021 (closed)	NYMEX WTI	201	51.29
April - June 2021 (closed)	NYMEX WTI	150	51.68
July - September 2021	NYMEX WTI	150	52.71
January - March 2022	NYMEX WTI	140	65.58
April - June 2022	NYMEX WTI	100	64.98
July - September 2022	NYMEX WTI	60	64.26
October - December 2022	NYMEX WTI	30	63.59

Crude Oil Basis Swap Contracts

Contracts Sold

Period

Settlement Index

Volume
(MBbld)

Weighted Average Price Differential
($/Bbl)

February 2021 (closed)

NYMEX WTI Roll Differential (1)

0.11

March - July 2021 (closed)

NYMEX WTI Roll Differential (1)

125

0.17

August - December 2021

NYMEX WTI Roll Differential (1)

125

0.17

January - December 2022

NYMEX WTI Roll Differential (1)

125

0.15

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(1) This settlement index is used to fix the differential in pricing between the NYMEX calendar month average and the physical crude oil delivery month.

NGL Financial Price Swap Contracts

Contracts Sold

Period

Settlement Index

Volume
(MBbld)

Weighted Average Price
($/Bbl)

January - June 2021 (closed)

Mont Belvieu Propane (non-Tet)

29.44

July - December 2021

Mont Belvieu Propane (non-Tet)

29.44


Natural Gas Financial Price Swap Contracts
		Contracts Sold			Contracts Purchased
Period	Settlement Index	Volume (MMBtud in thousands)	Weighted AveragePrice ($/MMBtu)		Volume (MMBtud in thousands)	Weighted Average Price ($/MMBtu)

January - March 2021 (closed)	NYMEX Henry Hub	500	$	2.99	500	$	2.43
April - July 2021 (closed)	NYMEX Henry Hub	500	2.99		570	2.81
August - September 2021	NYMEX Henry Hub	500	2.99		570	2.81
October - December 2021	NYMEX Henry Hub	500	2.99		500	2.83
January - December 2022 (closed) (1)	NYMEX Henry Hub	20	2.75		—	—
April - July 2021 (closed)	Japan Korea Marker (JKM)	70	6.65		—	—
August - September 2021	JKM	70	6.65		—	—

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(1) In January 2021, EOG executed the early termination provision granting EOG the right to terminate all of its open 2022 natural gas price swap contracts. EOG received net cash of $0.6 million for the settlement of these contracts.

Commodity Derivatives Location on Balance Sheet. The following table sets forth the amounts and classification of EOG's outstanding financial derivative instruments at June 30, 2021 and December 31, 2020. Certain amounts may be presented on a net basis on the Condensed Consolidated Financial Statements when such amounts are with the same counterparty and subject to a master netting arrangement (in millions):


		Fair Value at
Description	Location on Balance Sheet	June 30, 2021		December 31, 2020
Asset Derivatives
Crude oil, NGLs and natural gas derivative contracts -
Current portion	Assets from Price Risk Management Activities	$	—	$	65
Noncurrent Portion	Other Assets	—		1
Liability Derivatives
Crude oil, NGLs and natural gas derivative contracts -
Current portion	Liabilities from Price Risk Management Activities (1)	$	396	$	—
Noncurrent portion	Other Liabilities	14		1

(1) The current portion of Liabilities from Price Risk Management Activities consists of gross liabilities of $430 million, partially offset by gross assets of $34 million, at June 30, 2021.

Credit Risk. Notional contract amounts are used to express the magnitude of a financial derivative. The amounts potentially subject to credit risk, in the event of nonperformance by the counterparties, are equal to the fair value of such contracts (see Note 11). EOG evaluates its exposures to significant counterparties on an ongoing basis, including those arising from physical and financial transactions. In some instances, EOG renegotiates payment terms and/or requires collateral, parent guarantees or letters of credit to minimize credit risk.

All of EOG's derivative instruments are covered by International Swap Dealers Association Master Agreements (ISDAs) with counterparties. The ISDAs may contain provisions that require EOG, if it is the party in a net liability position, to post collateral when the amount of the net liability exceeds the threshold level specified for EOG's then-current credit ratings. In addition, the ISDAs may also provide that as a result of certain circumstances, including certain events that cause EOG's credit ratings to become materially weaker than its then-current ratings, the counterparty may require all outstanding derivatives under the ISDAs to be settled immediately. See Note 11 for the aggregate fair value of all derivative instruments that were in a net liability position at June 30, 2021 and a net asset position at December 31, 2020. EOG had $107 million of collateral posted and no collateral held at June 30, 2021, and had no collateral posted or held at December 31, 2020.